MGNT 4670 CHAPTER 13 Strategy in Intl Bus. 2013

Locationeconomies locationeconomies

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Unformatted text preview: of goods or services Core competencies are skills within the firm that Core competitors cannot easily match or imitate competitors Core competencies are the bedrock of a firm’s Core competitive advantage and enable them to reduce the costs of value creation costs EXPANDING THE MARKET: LEVERAGING EXPANDING THE MARKET: LEVERAGING PRODUCT AND COMPETENCIES ► Examples of core competencies: Toyota – production of cars McDonald’s – fast food McDonald’s operations operations Proctor & Gamble – Proctor development and marketing of consumer products of Wal-Mart – information Wal-Mart systems and logistics for large retail operations large Can you think of any others? LOCATION ECONOMIES LOCATION ECONOMIES ► ► ► ► ► Realized by performing a value creation activity in an optimal location anywhere around the globe Often arise due to differences in factor costs Due to differences in factor costs, some countries have comparative advantage in production of certain products It can lower costs of value to enable low cost strategy and/or help in differentiation of products from competitors Global web: different stages of value chain are dispersed to those locations where perceived value is maximized or costs of value creation are minimized COST ECONOMIES from COST ECONOMIES from EXPERIENCE EFFECTS: Recall New Trade Theory ► ► Experience Effects: The systematic reduction in production costs that occurs over the life of a product. First observed in aircraft industry where unit costs reduced by 80% each time output was doubled How is the reduction brought about? Learning effects: cost savings that come from learning co...
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